The presidential contest pits President Hassan Rouhani against a serious challenger, Seyyed Ebrahim Raisi, in what is believed to be a close race.
Some 63,500 polling stations opened at 08:00 local time (0330 GMT) for long lines which had already formed around the country where more than 56 million are eligible to vote.
Polls close at 18:00 (1330 GMT), but voting hours will most likely be extended.
Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei was among the first to cast his ballot, calling on Iranians to turn out in big numbers.
Speaking after casting his vote, the Leader said, "I thank God Almighty for the blessing of democracy and people's participation in the election. This is a great blessing.”
"Praise be to God, our people are thankful for this blessing. You see they are participating and my advice is that more and more people participate and come to the polls at the earliest time possible."
Ayatollah Khamenei described the 2017 elections as very important, saying the destiny of the country is in the hand of the masses.
"I believe a good work should be done in early hours and should not be delayed. I also believe the presidential election is very important," the Leader said.
"The destiny of the county is in the hands of the people who choose the chief executive. They should heed the importance of this task," Ayatollah Khamenei added.
Besides picking a president, Iranians inside the country are also voting to choose members of the country’s City and Village Councils.
"The City and Village Councils Election is also important as it elects those who are in charge of urban and rural services, namely the everyday issues involving the people,” the Leader added, according to Press TV.
This year’s presidential race features four presidential candidates, namely incumbent Hassan Rouhani, who is running for a second term, Seyyed Ebrahim Raisi, former deputy judiciary chief, member of Iran’s Expediency Council Mostafa Aqa-Mirsalim and former vice president, Mostafa Hashemi-Taba.
However, Rouhani and Raisi are viewed as the viable contenders after two candidates from a field of six, Tehran Mayor Mohammad Baqer Qalibaf and Vice President Is’haq Jahangiri, dropped out in the final days of campaigning.
Rouhani has been campaigning on the platform of an active foreign policy meant to enhance international relations.
Raisi has also vowed a strong economic management towards the elimination of poverty and unemployment.